Pa. Nutrient Trading Helps Meet Goals, DEP Says

Municipalities and developers increasingly are turning to Pennsylvania's nutrient trading program as a cost-effective means of reducing nutrient pollution in the state's waterways, Cathy Curran Myers, Department of Environmental Protection deputy secretary, told a joint panel of Senate committees on Sept. 17.

Testifying before the Senate Agriculture and Rural Affairs and Environmental Resources and Energy committees, Myers said the commonwealth's innovative program is a positive step as the state works to reduce the levels of nitrogen, phosphorus, and sediment that have impaired streams and rivers.

"Pennsylvania's trading program is one of the nation's most comprehensive, as it is one of the first of its kind to have nonpoint source and point source trading options," Myers said. "This innovative, market-based system is leading to cleaner water in Pennsylvania while helping the state to comply with increasingly stringent federal water quality standards. It is also paving the way for new investments in the state's communities -- especially in Pennsylvania's rural areas where agriculture is strong and farmers are doing their part to reduce pollution to our waterways.

"It was created as an innovative and scientifically based option that was implemented as one of many alternatives for communities to reduce the amount of nitrogen, phosphorus and sediment that impairs and degrades our streams and rivers. The program has established itself as a viable option for farmers to generate new revenues, for communities to keep consumer fees and charges related to drinking water and wastewater low, and for treatment plants and developers to meet water quality standards."

By 2010, Pennsylvania and other states in the 64,000-square-mile Chesapeake Bay watershed must meet federally established requirements for nutrient and sediment reduction to remove the bay from the U.S. Clean Water Act's list of impaired waters.

Pennsylvania's nutrient trading program has been reviewed by the U.S. Environmental Protection Agency and has been found to be consistent with that federal agency's policies relating to trading programs, as well as those of the Chesapeake Bay Program. As of Aug. 27, 57 proposals have been submitted for review with 32 being approved for 702,892 nitrogen credits, 80,072 phosphorus credits, and 35,593 sediment reductions.

Five contracts are in place whereby the credits will be used for complying with permit conditions. Three contracts have been with developers for credits to meet the net zero load and two contracts have been with treatment facilities.

"Dischargers and developers are beginning to consider credit purchases instead of traditional bricks and mortar solutions to meet their water quality obligations," said Myers, pointing to two examples where municipalities are using nutrient trading to reduce the cost of complying with federal water quality requirements while keeping rates down for citizens.

Fairview Township, York County, will purchase 20,000 nitrogen credits per year for the next 15 years from Red Barn Trading Co. of Lancaster. The municipality's estimated costs to upgrade its sewer plants and the sewage treated at the Lower Allen plant was $6.2 million, which would have required a rate increase of $22 per quarter for residents. Under the nutrient trading agreement, residents will only see a $9 increase per quarter.

In 2007, Mount Joy Borough, Lancaster County, became the first municipality to implement nutrient trading as part of its overall permit compliance plan. The borough invested $2.9 million in plant improvements and partnered with a local farmer who will generate credits by converting more than 900 acres to continuous no-till agriculture. Mount Joy reduced its annual projected cost for nutrient treatment using the trading option from $382,500 per year to $248,000 per year -- a 35 percent reduction.